DeFi in the crypto-world is currently rising fast. DeFi is dedicated to addressing conventional finance issues. The Deri Protocol now provides traders with accurate and capital-efficient measures to exchange derivatives with risk exposure.
Deri Protocol is a decentralized platform for accurately and efficiently exchanging risk exposures. DeFi is the way to sell products all on chain. Risk exposures are defined by the Deri Protocol as NFTs so that it can be imported for its own financial reasons into other DeFi programs. This is done by liquidity pools that perform positions. With an efficient on-chain process for exchanging and maintaining the threats, the Deri Protocol has identified one of DeFi’s most critical building blocks.
Exchanging risk exposures along with borrowing&lending, spot exchanges and more are one of the central functions of finance. Blockchain needs an on-chain mechanism as a financial infrastructure.
Centralized crypto derivative exchanges (CEXs) have in turn been used for the sharing of risk exposures for some time in the crypto-world. However, as CEX is not endogenous in the blockchain, it cannot communicate directly with other on-line operations (i.e., transactions). There is no way for CEXs to play an on-chain (decentered) sharing mechanism, however, even though they can act partially as a plug-in for the Decentralized Finance (DeFi) ecosystem. And because of the same, hybrid options (often on-chain, sometimes off-chain) have added values for some situations, they are also not DeFi’s ultimate option.
Simply put, an initial and organic approach to the exchange of risk exposures in the crypto universe must be blockchain.
How Deri Protocol works
The Deri is kinda a shortcut for derivatives. As the name suggests, the Deri protocol makes trading derivatives easier for humans. The Deri Protocol is essentially a decentralized protocol which allows users accurate and efficient exchange of risk exposures. The Deri Protocol is structured with all the distinguishing characteristics of DeFi and financial derivatives as the solutions for the decentralized derivative exchange.
The Deri protocol system is somewhat similar to Uniswap’s, where traders’ counterparty pools play the role. For Uniswap, where the spots are exchanged, each pool keeps a couple of tokens and is prepared to trade one for the other at the request of traders. In the case of Deri, though, the pools play the part of the derivatives’ counterparties. In finance, such a function is called the dealer in derivative trading. The derivative trading desks of investment banks are the typical derivative dealers.
Essentially, the derivative trade desks of the DeFi world are the liquidity reservoirs of the Deri Protocol. As counterparts for their customers, they enter into derivative contracts. That is, they are against the trading positions of their customers. The commercial offices cover their net roles and handle their business risks in the conventional banking industry.
The Deri protocol enables users to transact in easy steps with a Uniswap-style pool:
– Go to the homepage, log in to your wallet (e.g. MetaMask)
– Choose the trading underlying (i.e. choose the pool)
– Specify direction, volume and leverage (long/short) (margin to post)
– Put your order in the wallet and check it. The pool processes the order and sets a position token for the trader if the margin condition is fulfilled.
When an order is processed, the pool will display a position token (an NFT) for recording the following position parameters and transfer this token to the address of the trader.
– Direction & volume
– Entry price
– Margin held
To carry out the following operations, the trader can return to the pool:
– Closing position: the pool calculates the PNL and penalties, reimburses the base token to the holder’s address and burns the token of the position.
– Place Adjustment: Rising or decreasing
– Margin Adjustment: further deposit or retirement
In any case where risk exposure is needed, the position token may be used.
The underlying price of every liquidity pool is updated by a “oracle.” This could be an out-of-chain oracle server or an intelligent on-chain oracle contract. Whenever there is an action (e.g. a broker works or a liquidity supplier adds/removes liquidity), the pool obtains the current oracle pricing and uses it as the price mark for updating the status or calculating the cash-to-share prices.
Under the Deri protocol, the majority-side financing payments for each pool are charged and minority positions are reimbursed. The long and short sides of the positions must be balanced.
If the trade mark price breaks the liquidation price, a spot token can be liquidated. The liquidating feature of the token triggers the liquidation. This role can be named by anyone if the liquidation is fulfilled (as a liquidator). The liquidator pays the gas and pays the balance of the position.
The residual margin is allocated to the liquidator and the bottle when liquidation is caused. The place token is burnt and no longer exists.
Mining on Deri Protocol
In the Deri Protocol mining program there are various ways to participate.
– Liquidity mining by providing basic tokens in trading pools: By adding liquidity to their internal pools, users can earn Deri rewards. At present there are five trade pools on the platform (2x $BUSD, $USDT, $BAC, HUSD). You must log into the BSC network, for example, for my $DERI rewards by BUSD. Each trading pool will receive a blockchain. Details will be shown in this video.
– Liquidity mining with the DERI-USDT SLP staking in Sushiswap’s Onsen pool (Ethereum Network). You can find the comprehensive guide video here.
– Trading mining (0.01DERI per contract or distributed per volume weight if breaching the hourly upper limit): For any deal you exchange, you now receive 0.01DERI. However, the cumulative mining volume per pool has an hourly maximum limit of 500 DERI. That is, if a pool’s overall volume of trading is more than 50,000 agreements within one hour, the traders share DERI 500 according to their trading volume. You can find details on your collection and the assert button on the mining summary tab. Notice that if you have invested in all, “Unclaimed DERI” includes both the liquidity extractive and trading harvests.